United Airlines 2008 Annual Report Download - page 30

ITEM 3. LEGAL PROCEEDINGS.
In re: UAL Corporation, et. al.
As discussed above, on the Petition Date the Debtors filed voluntary petitions to reorganize their
businesses under Chapter 11 of the Bankruptcy Code. On October 20, 2005, the Debtors filed the
Debtor’s First Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the United States
Bankruptcy Code and the Disclosure Statement. Commencing on October 27, 2005, all eligible classes of
creditors had the opportunity to vote to accept or reject the Debtors proposed Plan of Reorganization.
After a hearing on confirmation, on January 20, 2006, the Bankruptcy Court confirmed the Plan of
Reorganization. The Plan of Reorganization became effective and the Debtors emerged from bankruptcy
protection on the Effective Date.
Numerous pre-petition claims still await resolution in the Bankruptcy Court due to the Company’s
objections to either the existence of liability or the amount of the claim. The process of determining
whether liability exists and liquidating such claims will continue in 2009. Additionally, certain significant
matters remain to be resolved in the Bankruptcy Court. For details see Note 4, “Voluntary
Reorganization Under Chapter 11,” in Combined Notes to Consolidated Financial Statements.
Air Cargo/Passenger Surcharge Investigations
In February 2006, the European Commission (the “Commission”) and the U.S. Department of
Justice (“DOJ”) commenced an international investigation into what government officials described as a
possible price fixing conspiracy relating to certain surcharges included in tariffs for carrying air cargo.
DOJ issued a grand jury subpoena to United and the Commission conducted an inspection at the
Company’s offices in Frankfurt. In June 2006, United received a second subpoena from the DOJ
requesting information related to certain passenger pricing practices and surcharges applicable to
international passenger routes. We are cooperating fully. United is considered a source of information
for the DOJ investigation, not a target.
Separately, United has received information requests regarding cargo pricing matters from the
competition authorities in Australia, Brazil, Japan, Korea and Switzerland. On December 18, 2007, the
Commission issued a Statement of Objections to 26 companies, including United. The Statement of
Objections presented evidence related to the utilization of fuel and security surcharges and the exchange
of pricing information that the Commission views as supporting the conclusion that an illegal price-fixing
cartel had been in operation in the air cargo transportation industry. United has provided written and
oral responses vigorously disputing the Commission’s allegations against the Company. On July 31, 2008,
state prosecutors in Sao Paulo, Brazil, commenced criminal proceedings against eight individuals,
including United’s cargo manager, for allegedly participating in cartel activity. The Company is actively
participating in the defense of those allegations. On December 15, 2008, the New Zealand Commerce
Commission issued Notices of Proceeding and Statements of Claim to 13 airlines, including United. The
Company is currently preparing its response to these proceedings.
In addition to the government investigations, United and other air cargo carriers were named as
defendants in over ninety class action lawsuits alleging civil damages as a result of the purported air
cargo pricing conspiracy. Those lawsuits were consolidated for pretrial activities in the United States
Federal Court for the Eastern District of New York on June 20, 2006. United entered into an agreement
with the majority of the private plaintiffs to dismiss United from the class action lawsuits in return for an
agreement to cooperate with the plaintiffs’ factual investigation and United is no longer named as a
defendant in the consolidated civil lawsuit. The Company is reviewing whether its receipt of a Statement
of Objections from the Commission will impact the civil litigation.
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